New Delhi: State Bank of India, the country’s largest commercial bank, has started the consolidation process with its associate banks by deciding to merge State Bank of Saurashtra (SBS) with itself.
“This is the beginning of the whole group’s restructuring. State Bank Of Saurashtra is the smallest of the seven associates and based on the experience we will look at other banks,” SBI managing director TS Bhattarcharya told PTI.
The boards of both SBI and State Bank of Saurashtra, its wholly-owned subsidiary, approved the merger proposal on 25 August.
Bhattacharya said the bank had mandate only for SBS at present and it would shortly seek RBI and government approval.
The other associates are State Bank of Travancore, State Bank of Mysore, State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Indore and State Bank of Patiala.
Of these, the first three are listed on the stock exchanges. SBI’s controlling interest in the associates ranges from 75% to 100%. After SBS, SBI is likely to merge the other three unlisted arms and then follow it up with the listed ones.
SBS has a network of 460 branches, whose consolidation would help eliminate duplication of branches in the same area. This process would start once the merger gets necessary approvals. Its net profit rose 45% to Rs87.4 crore in 2006-07.
The bank has a paid-up capital of Rs314 crore. Total deposits stood at Rs15,804 crore while advances were Rs11,081 crore. Capital adequacy was 12.78% as on 31 March, 2007.